Property scams on the rise

Every day, many people get an unmistakable ding on their phones signalling a notification. An unsolicited text from an unfamiliar number pings their phone, riddled with grammatical mistakes but brimming with just enough urgency or charm to hint at a scam.

While many users dismiss it with a scoff and a swift block, these messages still find traction. For the vulnerable few, curiosity or circumstance may override scepticism and that is all it takes for the scam to work.

This has continuously been proven because day by day, news headlines depict the latest scam victims and their woes.

Zeroing in on a particular scam that affects Malaysians, property scams have been around for decades and there is almost certainly an underlying complex network within which they operate. The losses tend to be significant as well, regardless of whether it is a wealthy person losing millions or a poor student losing hundreds of ringgit.

Recent frauds

To paint a picture of how severe property scams can be, a group of 30 Chinese students studying in Malaysia filed a police report against a scammer posing as a real estate agent (REA) in November. Collectively, they lost an estimated one million yuan (RM660,000) in advance rental payments.

Another case in November saw a Malaysian man lose RM5,000 in a scam, where the rental unit turned out to be sort of an Airbnb that the scammer leased for a few days for tours.

A report by The Board of Valuers, Appraisers and Estate Agents Malaysia (LPPEH) stated that unlicenced property agents have defrauded almost 1,500 people for nearly RM60mil from 2019 until 2023.

Property investment frauds are also on the rise, including an incident in which over 80 people lost more than RM11mil.

Property scams are quickly becoming more sophisticated. An article interviewing Universiti Teknologi Malaysia property economics and finance professor Dr Muhammad Najib Razali uncovered some interesting factors.

He attributed the alarming rise of rental scams to the high demand by students, expatriates and young professionals.

According to Muhammad, the lack of standard verification mechanisms for landlords or agents makes it all too easy for scammers to impersonate legitimate property owners or REAs.

“The current rental market practices and regulations in Malaysia remain inadequate to effectively deter scams where the absence of a centralised regulatory body creates loopholes that unethical individuals exploit to target tenants,” he said in the interview. “Language barriers and limited access to local networks further hinder their ability to verify the legitimacy of landlords or agents.”

Common property scams

So what are some common property scams out there?

The most annoying ones are probably the fake rental listings, where scammers advertise non-existent or already rented properties at too-good-to-be-true prices. Victims are often solicited to utilise third-party communication apps and then asked to pay deposits or advance rental payments.

Another common scam is the impersonation of licenced REAs. Scammers create false identities and documentation to tempt potential renters or buyers of their legitimacy, offering deals that seem too good to be true.

Deposit manipulation is also a tactic where scammers demand unusually high deposits or fees for nonexistent services, leaving victims with no recourse.

In some instances, scammers sell properties they do not even own or have any authority to rent out, sometimes providing convincing but fake paperwork to mislead potential buyers.

Advance payment for future rentals is another tactic where victims pay for properties that are not yet available, often under the guise of securing discounted rates. To the renter, the thought of discounted rates is enough to seal the deal without further foresight.

To protect yourself from these scams, it is essential to conduct thorough research, meet landlords or agents in person and never send money without proper verification of the property.

One particularly crafty scheme making the rounds is the so-called Buy 2, Sell 1 scam – a slick pitch that has been quietly targeting eager investors.

Disguised as a legitimate property or investment opportunity, this scam typically lures victims with the promise of buying two units with the guarantee that one will be sold off at a profit, supposedly covering the cost of the entire deal.

The catch? That third-party sale either never happens, or if it does, it is usually at a significant loss. What’s left is an investor saddled with overpriced assets and no sign of the promised returns.

Scammers have no licence

In Malaysia, people in the real estate game fall into two main categories, real estate negotiators (RENs) and REAs. To become a REN, they need to finish the Negotiator Certification Course (NCC) and pass qualifying exams.

On the other hand, if they want to be a registered REA, they have to pass the Probationary Estate Agent (PEA) exam, go through an internship and ace an interview.

Once they have received the right certification and licence, they are essentially allowed to offer real estate services in Malaysia from then on.

Legitimate REAs need to show their licences at all times to work legally. These licences are colour-coded and everyone who enlists the help of an agent should know what they mean.

REN licences are red, while REA licences are blue. Any other colour is a red flag.

Each licence includes some key info, like the agent’s name, photo, identification number, licence number in a REN12345 format, the name of the real estate company, the company’s registration number, a QR code and the logo of the Malaysia Board of Valuers, Appraisers and Estate Agents Malaysia (BOVAEA).

The BOVAEA database has a list of registered and verified real estate agencies, so conduct due diligence.

Additionally, as per BOVAEA regulations, every website that REAs promote their properties on must have specific information on their listings. The electronic registration number of the agent, the agent’s name, the REN number of the real estate agency and a contact number.

Without these, the listing should raise immediate concern.

Real estate agency IQI shared a list of where to file complaints.

If someone has fallen for a rental scam, reach out to the LPPEH, Ministry of Communications and Multimedia Malaysia for online fraud, Bank Negara for financial fraud, the Construction Industry Development Board for renovation and construction scams and the Malaysian Ministry of Trade and Consumer Affairs for consumer fraud.